Wednesday, September 14, 2016

Factors that influence share prices in Singapore Stock Exchange

From my personal observation, I notice some
factors that affect the share prices of the listed companies in Singapore Stock
Exchange.

The first factor that influence share
prices is the performance of the regional and international stock markets.

The stock market in Singapore is
not as big as the stock market in Hong Kong
and Japan.
The price changes in the stock markets in Hong
Kong, United States
and London
affect the share price in Singapore.

The stock market opens at 9 am from Monday to Friday. From 9 am to 10 am, the trend in the share prices follows the stock
market in United States.
When the Dow Jones Index declines sharply, the Straits Times Index will
decline. The decline will not be as drastic as the Dow Jones Index.

From 10
am onwards, the trend in the share prices reflects the influence of
the stock market in Hong Kong. Sometimes, the
Hang Seng Index falls by 600 points, the Strait Times Index will fall. The fall
in Straits Time Index is not as drastic as Hang Seng Index.

Singapore
is a very small country with open-economy. It is not surprisingly to see that
the investors pay more attention to international stock markets.

The price of oil affects the share prices
of listed companies dealing in oil palm. Once the oil price hits a record high,
the share prices of listed companies dealing in oil palm will hit the roof.

The second factor that influence share
prices is the local sentiment. The share prices in the stock market always show
an upward trend before the Singapore National Day. The share prices and volume
will decline during the Hungry Ghost Month.

While I can understand the upward trend in
the share prices before Singapore National Day, I do not understand the decline
during the Hungry Ghost Month. I doubt the ghosts have anything to do with the
share prices.

The third factor that influence share
prices is the rumors and news release. The rumors are very powerful factor to
affect the share prices. The rumor of mergers and acquisitions will increase
the share prices to an unreasonable level.

The fourth factor that influence share
prices is the technical analyst and foreign investors. In Singapore, there are many investors
using technical analysis methods to predict a trend. Some technical analysts
offer a few days workshop to teach technical analysis method of investment.

After the technical analysts and foreign
investors buy in bulk, the speculators will push the share prices higher. Most
of the drastic increases or decreases affect the share prices of small
companies.

Most speculators do not want to play with
the share prices of companies under Temasek Holdings.

There is definitely risk in all investments. "Playing" with share price is a very risky concept, no matter who is the backer of the listed companies.Companies under Temasek Holdings do not always do well. Those who had invested in Chartered Semiconductor since IPO would have lost more than 90% of their capital by the time Temasek sold it off.Similarly, those who had invested in NOL before the crash in 2008 and held till the delisting offer would have lost a lot of money.